Dhurjati Mukherjee
The hype around the budget will be over within a few days but the recent trade deals need analysis, keeping in view the total potential in creating jobs. The scenario does not look quite encouraging though there are some positive points that cannot be denied. Questions have been raised about efforts made with regard to job creation in the budget? Is it not another attempt to woo the upper echelons of society? Another distressing aspect is the low female labour force participation in India, which is low compared to even Bangladesh and Pakistan. Women professionals have been wondering why a woman finance minister has not taken any initiatives in this regard. These questions remain unanswered in the budget.
However, the most important thing that needs to be highlighted at the very outset is the fact that around 45 percent of the population is still engaged in agriculture, obviously, the reason being lack of better and dependable employment in the country. Agriculture as a sector is growing far slower than the Indian economy – 4.4 percent vs 7.4 percent. Thus, India’s protectionist stand in trade deals is undoubtedly justified. However, economists ponder over the question of how many decades will it take to reduce agricultural population, say, to around 20 percent.
The first thing that strikes us is that the government slashed the allocation for the Pradhan Mantri Viksit Rozgar Yojana (PMVBY), an ELI scheme by over 90 percent in the RE over the budgetary estimate. Moreover, the government allocated just Rs 95,692 crore for VB-GRAM G, that is set to replace MGNREGA, is believed to be much less than the required funds as the scheme seeks a guaranteed increase of employment per year to 126 days. It is quite obvious that the new scheme might see a decline in performance as the fund sharing formula has changed with the states having to bear 40 percent of the expenditure, up from 10 percent under the MGNREGA. It would thus be easy for the Centre to blame the states if the new scheme delivers less than that of the MGNREGA as is bound to happen.
The unequal income distribution skewed to urban centres results in severe lack of employment opportunities in rural as well as semi-urban areas. While the government refers to World Bank data to show the decline in poverty levels, nobody questions what is the income improvement of the segment that has crossed the line and whether they can afford the basic necessities. Something favourable would have worked if the government would have allocated more money for the job scheme and now, depending on the states for 40 percent contribution may lead to a fiasco. The promise of 125 days of work per household will obviously not be met though the Centre can’t be blamed.
Though there has been a lot of talk on skilling programmes, it is amply clear that employment opportunities are shrinking and both the Centre and the states are oblivious to the fact. However, the emphasis on electronics and IT has been quite positive with iPhones being manufactured in the country, creating around 2 lakh direct jobs. But the lack of adequate resources for the health sector may stand in the way of creating employment for para-medical staff, lab technicians, caregivers and the like. Though the emphasis on manufacturing has rightly been given the necessary thrust over the years and specially in the recent budget, a lot depends on the private sector which is yet to come forward in a big way to invest in this sector.
As regards innovation is concerned again the private sector does not spend adequately on R&D while most universities are starved of funds. Added to this research fellowships have not seen any increase in recent years while some have been reduced. In a situation where technology upgradation is vital for new avenues and jobs, this obviously is not the right strategy. It is necessary that both the public and private sectors allocate adequate funds for R&D in tune with other emerging nations such as Brazil, South Africa, Indonesia etc.
The emphasis on the MSME sector in the budget definitely needs to be applauded as it represents the most significant opportunity for achieving inclusive growth in this decade. To put this in perspective, with 63.4 million enterprises contributing 30 per cent to GDP and employing over 100 million people, the MSME sector’s economic footprint is much larger than the entire economy of countries like Thailand or Sweden. MSMEs have a Rs 20-25 lakh crore credit gap. Access to credit for this sector has to be ensured, specially by the nationalized banks as it has immense employment generation potential.
While the emphasis on infrastructure is well taken, more financial allocation for social infrastructure, that is, education and health sectors could have opened job opportunities. This is something that needs to be adhered to by both the Central and state governments as these are vital areas and needs special focus. Moreover, it is indeed tragic that India attracts just 1.3 percent of the world’s tourists and this sector, which is a huge job creator, needs to be given a thrust as many smaller countries like Thailand have been centres of attraction. The regulations in starting hotels needs to be simplified while the cost structure must be brought down to withstand competition.
Coming to the trade deals, the most important one with the US revives hopes of generating jobs in labour-intensive areas like textiles, footwear and gems and jewellery. Here it needs to be mentioned that the emphasis in the budget on apparel, particularly textile modernisation and footwear, needs to be applauded as this area has high potential in view of the trade deals with the US and the European Union. These have rightly been applauded by the prime minister at the recent ET NOW summit. But India should not just depend on them but to create enhanced employment, it should go in for aggressive marketing not just in the above markets but also in the new and unexplored ones.
The point that needs to be made here is that exports may be boosted up and may benefit the economy of the country and create employment of skilled and highly skilled personnel cannot be doubted. Though skilling has rightly been taken up on a big scale, the hype over AI needs to be seriously considered in view of its potential to further reduce jobs.
However, the larger question remains of what would happen to say semi-skilled, Class XII pass-outs etc. who do not even have the money to set up a micro level unit. There is a need to think of some plan to boost the rural economy so that adequate employment opportunities are created – whether through self-employment or very small manufacturing units of various types of goods. It is in this realm that an area-specific survey should be conducted, and technical training imparted to those who could benefit. An overall strategy is critical.—INFA
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